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Murali Gopalan
Mumbai, June 20: The board of Indian Oil Corporation has given the go-ahead to pick up a 26 per cent stake in Central India pipeline (CIPL) initially proposed by Reliance Petroleum (RPL). The decision will soon be conveyed to the ministry of petroleum and natural gas.
Sources say that IOC has insisted on 26 per cent equity in the Rs 4,400-crore project as the pipeline will evacuate products from its Gujarat refinery, in addition to those of RPL and Essar Oil, en route to Gwalior.
RPL and Petronet India will, logically, account for 26 per cent each in CIPL even while the petroleum ministry is yet to take a final view on the matter.
The present formula under review involves Petronet accounting for 51 per cent (to represent all the oil PSUs), RPL 26 per cent, Essar Oil 11 per cent with the balance to be held by a financial institution. The stakes of RPL and Essar Oil have been roughly computed on their refining capacities of 27 million tonnes and 10.5 million tonnes each.
The proposal has, however, notgone down too well with IOC which has maintained that it should hold 26 per cent, given that it already has a marketing tie-up with RPL in place to evacuate the latter's products.
IOC has added that, unlike Bharat Petroleum Corporation and Hindustan Petroleum Corporation, the pipeline will carry products form its refinery in Koyali, Gujarat. CIPL, in fact, has factored in a separate network meant for IOC, Koyali-Ratlam, proposed to be built by Petronet separately but now clubbed to avoid duplication.
It remains to be seen what the petroleum ministry's stance will be on the IOC proposal for a controlling stake in CIPL. If this is acceded to, there is no way either BPCL or HPCL will be allotted berths in the project as 78 per cent of the equity will have been sewn up by IOC, RPL and Petronet.
Assuming that Essar Oil also stakes a claim, it will only leave 11 per cent which will be offered to a financial institution. The interesting twist could occur if BPCL decides to take a stake in Essar Oil, aproposal currently under review, which will then result in the PSU participating in the equity of CIPL.
The CIPL network will begin from Jamnagar and reach Koyali where a new product storage terminal of IOC's Gujarat refinery is being planned. Rajkot is proposed to be an intermediate delivery point en route.
The products of the Gujarat refinery will be injected into the system at Koyali. The provision of connecting CIPL with IOC's Koyali-Ahmedabad and Koyali-Navagam pipelines at Koyali has also been made for flexibility in the supply source.
From Koyali, the pipeline will extend to Ratlam where it will be bifurcated into two networks. The northern trunk pipeline will go to Kota and terminate at Gwalior while a 180 kilometre branch pipeline is planned from the Ratlam-Kota section.
The other network, the southern trunk pipeline, will pass through Itarsi and thereon to Nagpur.
It shall either be terminated here or be extended up to Hyderabad depending upon the viability of the Nagpur-Hyderabad section.Branch pipelines are planned for Indore and Bhopal from the Ratlam-Itarsi section.
It was in October last year that RPL submitted its pipeline plan which involved constructing a 550 km network from Jamanagar to Indore via Ahmedabad. In the second phase, the company planned to extend this from Indore to Hyderabad via Bhopal and Nagpur. Two branch pipelines were also part of the proposal -- one from Ahmedabad to Patna via Udaipur, Kota, Gwalior, Kanpur and Allahabad and the other from Ahmedabad to Hazira.
Petronet objected to the plan in a communique to the petroleum ministry as this project was planned by RPL on its own unlike others which came under the Petronet umbrella. The apprehension then was that oil PSUs would also build pipelines on their own without routing them through Petronet.
The other problem was that the RPL plan could even jeopardise some projects of Petronet like Koyali-Ratlam, Bina-Jhansi-Kanpur and Paradip-Rourkela-Ranchi-Allahabad.
While this issue was being sorted out, EssarOil submitted a proposal for a pipeline from Jamnagar to Ahmedabad and thereon to Meerut via Ratlam, Kota and Faridabad. A spurline was also planned from Kota to Jhansi, Kanpur and Allahabad. A committee was set up to examine these projects as also those planned by Petronet and it was decided that while finalising the modified CIPL, the northern branch would terminate at Gwalior.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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